Leong Wai Leng, a woman with two decades of experience in the corporate world, is leading Singapore-based Overseas Chinese Banking Corp's China arm as it seeks to become a major foreign lender on the Chinese mainland.
Her job is to expand the Asian bank's business in China and navigate the country's rapidly changing financial landscape.
Born in Singapore, Leong, 45, has served as chairwoman and chief executive officer of OCBC Bank (China) Ltd since it incorporated in August 2007.
She also worked for HSBC, JPMorgan and Philips Electronics.
Under her leadership, OCBC has tripled its network and assets in China and increased its staff sevenfold to 700. It had 34 billion yuan (US$5.3 billion) in assets last year. The bank's loans more than doubled.
Last year, she received the Magnolia Award from the Shanghai government, a top honor for expatriates who contribute significantly to the city's economic performance, international relations, business environment, management standards or community development.
Having lived and worked in the city for the last 11 years, Leong considers the award an honor for the bank as it's the first time it was presented to a CEO from a Asian lender.
The Asian bank now has 14 outlets in seven mainland cities, with plans to expand to between 12 and 15 cities in the next three to five years. Its focus is on three regions along the wealthier eastern seaboard and the emerging regions of central and west China.
OCBC Bank now holds a 13.74 percent stake in the Bank of Ningbo, a city commercial lender listed on the Shenzhen exchange.
Shanghai Daily spoke with Leong in her office at the bank's China headquarters in the Lujiazui area in Shanghai's Pudong New Area. Her elegant attire was matched by an equally decorous office, adorned with 14 watercolor and oil paintings created by her daughter and two sons.
During the one-hour exclusive interview, Leong discussed the bank's strategies in China.
Q: What is the key to the bank's growth in China?
A: The key for us is to build a local team that caters to the China market. For instance, 85 percent of our branch heads are local people, while the localization at the sub-branch level is 100 percent.
Q: Why is that so important?
A: Without the right people who understand this market, it would be difficult for us to drive up business significantly. I stress the word "significantly." If we look at percentage growth year on year, because of the fact that the market is growing, by definition, any financial institution should grow in China.
But at OCBC we want to have a quantum leap in growth. That's because, one, our base is small. Two, as a commercial bank, there is a need for a minimum economy of scale, and only then we can talk about diversification of risk or a meaningful return.
So scale is critical. Over the past years, what we have been focusing on is recruiting a team that can generate business and control risk.
Q: Are you satisfied with the bank's scale in China now? The bank more than tripled its assets since its incorporation in 2007.
A: We are still not where we want to be in terms of scale. It took about four years for us to triple assets. I am hoping that we can triple them again in a shorter period.
Q: Any definite number on that?
A: Our assets grew to 34 billion yuan as of the end of 2010. We have to beat the market. The bank is now a medium-sized foreign bank, and we want to be classified as a major player.
Q: You stressed the importance of recruiting local people, but there is evidence that overseas banks are having a tougher time attracting top professionals now that Chinese banks are expanding and maturing.
A: That's definitely a trend. Chinese banks are becoming seriously competitive. The trend started with the listing of the Big-Five Chinese banks. That has basically changed the whole governance structure and the competitiveness of the Chinese banks. In terms of competition for talent, the Chinese banks are now serious, serious contenders.
Q: Did the global financial crisis accelerate the change a little bit?
A: As far as foreign banks are concerned, OCBC was a beneficiary of the crisis. Before that, OCBC was one of the strong Asian banks. After the crisis, a lot of American and European banks, in particular, weakened significantly. On the other hand, OCBC has grown from strength to strength in terms of our rating, overall stock price performance and financial performance. The fact that OCBC was nominated by Bloomberg News as the world's strongest bank shows the strength of the group.
Two, we have been in China since 1925 and have seen the 1997 Asian financial crisis and then the global financial crisis in 2008, and OCBC China didn't pull back its investment. We continued to invest in China. That is powerful from an employee point of view because it showed the bank's strong commitment. These two factors mean we are still in the position to compete with Chinese banks for talent.
Q: How would you describe OCBC?
A: In a way, our values are very Asian, but in terms of our financial products, risk controls and overall governance structure, we are very international. So we're quite a unique proposition.
Q: The average industry turnover rate is about 25 percent. What's the figure for OCBC?
A: That's a bit sensitive. Let's just say it's lower than the industry average but still a double-digit figure. That remains one of our challenges. We have to focus on creating an engaging working environment for our staff. We also have to focus on ensuring that what we are offering is at par with the market.
Q: What's your network expansion strategy?
A: We are not an international bank; we are a regional bank. We are going to remain very focused on that. At the group level, we focus on Singapore, Malaysia, China and Indonesia. We are not spreading our footprint across 50 countries and regions.
Similarly, in China, we will not attempt to go everywhere. Given our size, it's simply not realistic.
In the China context, we are not in a position to simply go after scale and geographic spread. We want to operate in four hubs - the Yangtze River Delta, the Pearl River Delta and the Bohai Bay regions as well as China's developing central and western areas.
Q: Real estate loans accounted for one-fifth of total loans. Do you think that contribution will drop amid China's tightening policy on the housing market?
A: As an Asian bank, real estate remains very close to our heart. That's something we can not run away from and will not run away from, and it's a market we understand fairly well. That's why we have a specialized team in China looking after real estate. Our loan portfolio in this sector, whether the market is up or down, it will always be there. That's key.
We will obviously work within guidance from regulators because this is the macro environment that we operate in. We respect that. The whole objective of the Chinese government is to stabilize price. Not for the price to fall dramatically but to at least ensure that price doesn't double every other year. We are operating in that kind of environment, which I think is healthy. We will continue what we are doing, which is work with developers that we know, those with good track records and with real estate as their core business, regardless of the macro environment.
Q: Do you plan to issue credit cards as they become a more popular form of payment in China?
A: Probably not. The credit card business is very much volume-driven. You need a minimum scale before you can become profitable. We don't think that's something we now can do better than existing companies. I wouldn't say we would never do it, but at this point, I don't think there is a compelling reason for us to go into that market.
It all comes back to our strategy: Keep focused. Operating in China, we have to say "no" to certain business opportunities. The China market is full of temptations. And it's very easy to be tempted.
We will focus on the affluent market segment in retail banking. By affluent, we mean we are looking at clients with 500,000 yuan of investable assets. Given our distribution network and product mix, we think that focus still makes a lot of sense to us.
Also, we are looking at starting our onshore private banking business within this year. We think it's a good time for us to introduce onshore private banking. I just got a report today that China has the world's third-largest population of millionaires.
Q: OCBC China more than doubled loan growth and nearly doubled asset growth last year. What's your target for 2011, given the backdrop of China's tightening monetary policy?
A: In loan terms, we are still projecting growth, but obviously not at the same level as last year. In terms of overall profitability, we remain optimistic that we will do better this year, compared with last year.
Chairwoman & chief executive officer, OCBC Bank (China) Ltd
Joined HSBC China as managing director, head of corporate & institutional banking
Joined Philips Electronics Asia Pacific Pte Ltd as director of regional liquidity management;
Moved to Shanghai as China country treasurer in 2000;
Promoted to corporate vice president, China group chief finance officer in 2002
Joined JPMorgan Singapore as relationship manager;
Promoted to vice president, regional account manager, covering large global customers throughout the Asia-Pacific region
Joined Citibank Singapore as management associate;
Spent four years as credit manager in corporate banking
Bachelor of Business Administration, National University of Singapore, Singapore